GENERAL INTEREST Quick Takes
Cairn Energy to exit Norway with Capricorn Norge sale
Solveig Gas Norway AS has agreed to acquire all shares of Capricorn Norge AS from Cairn Energy PLC for $100 million plus customary working capital adjustments on completion (including an adjustment for the tax receivable related to historical exploration activity).
The gross asset value of the interests being sold (per Cairn’s half-year report issued Sept. 10) was $207.4 million, with a net asset value of $80.1 million. Capricorn Norge AS reported a loss of $6.5 million for the period ending June 30.
Upon closing, expected in early 2020 subject to consent by the Norwegian Ministry of Petroleum and Energy, partner and third-party approvals, Cairn will have disposed of all of its assets in Norway and will reduce its committed exploration and development capital expenditure by $100 million.
In August, Cairn Energy sold a 10% interest in Nova oil field to ONE-Dyas Norge AS, Amsterdam, for $59.5 million plus working capital adjustments (OGJ Online, Aug. 6, 2019).
“We continue to have a material business in the UK North Sea where production performance of the Kraken and Catcher assets remains strong,” said Simon Thomson, Cairn chief executive.
Cairn holds 29.5% interest in the EnQuest-operated Kraken heavy oil field and 20% of Premier Oil PLC-operated Catcher oil field.
The transaction has an effective date of Jan. 1, 2020.
Osaka Gas plans US upstream expansion
Sabine Oil & Gas Holdings Inc. has closed the sale of its subsidiary, Sabine Oil & Gas Corp., to Osaka Gas USA Corp., a subsidiary of Osaka Gas. Acquired acreage is in Harrison, Panola, Rusk, and Upshur counties, among others, totaling 175,000 net acres. Production was 210 MMcfd from about 1,200 wells as of July 2019. Since July 2018, when Osaka Gas acquired 35% working interest in acreage in the east half of acquisition, the wells have been producing at greater than expected volumes.
Sabine boosted production primarily by proving up Haynesville shale in Texas via a combination of longer laterals and enhanced completions and proving up new Cotton Valley sand drilling inventory with longer laterals.
Osaka Gas President Takehiro Honjo commented that “while Osaka Gas has participated in the Freeport LNG liquefaction project and independent power producer projects in the United States, we intend to expand our US upstream business by enhancing our capabilities with Sabine Corp’s excellent operatorship.”
As part of the sale, Osaka Gas USA will retain the current Sabine executive team and employees. Sabine Holdings now has completely divested of all its oil and gas assets since emerging from bankruptcy in August 2016.
Vintage farms in to Cooper basin acreage
Vintage Energy Ltd., Adelaide, has completed moves to take control of the prospective Odin structure in the Cooper basin straddling the South Australian-Queensland border, announcing a 90-day exclusivity period to negotiate a binding farm-in agreement to take a 42.5% interest and operatorship of South Australian retention lease PRL 211.
The deal will leave joint venture partners Bridgeport with 21.5%, Metgasco Ltd. with 21.25%, and Senex Energy Ltd. 15%.
Vintage made an agreement with Metgasco, Sydney, to farm in to a 50% interest in Metgasco’s Queensland exploration permit ATP 2021 on the Queensland side in May.
Odin has a gross prospective resource, 2U best estimate of 12.6 bcf of gas. Strathmount-1 drilled on the South Australian side in 1987 intersected 21 m of gas sands with an interpreted 13.7 m of interpreted net gas pay.
Vintage said the Odin structure is fully covered by recent 3D seismic and has gas potential in the Permian-age Patchawarra and Toolachee formations. It lies on the southern flank of the Nappamerri Trough northeast of producing fields Bow, Beckler, and Dullingari. It presents as a four-way dip closure on a structural nose that plunges northeast into the Nappamerri trough.
It is also similar to the Vali prospect in ATP 2021 that Vintage intends to drill in December.
Under terms of the PRL 211 deal, Vintage, Bridgeport, and Metgasco will drill an Odin well with Vintage paying 50% of the estimated A$2 million well costs to earn 42.5% interest. Senex will be free-carried through drilling of this first well.
Exploration & Development Quick Takes
Equinor becomes Wisting development operator
Equinor and OMV agreed on transferring the operatorship for the Wisting license and development phase in the Barents Sea.
In June, the two companies signed a memorandum of understanding (MoU) to cooperate on the Wisting development. On Dec. 1, the parties agreed on the final cooperation agreement (OGJ Online, June 26, 2019).
Equinor becomes development operator for Wisting field, a 2013 discovery on PL537. Volumes are estimated at 440 MMboe. Interests are Equinor, 35%; OMV (Norge) AS, 25%; and Petoro and Idemitsu Petroleum Norge AS, 20% each.
OMV will assume the role as operator for the operation phase. Equinor will lead the development project with OMV personnel seconded into the project organization.
The transfer of operatorship is approved by Norwegian authorities.
Wintershall to plug discovery in the Norwegian Sea
Wintershall Dea Norge AS has collected data and samples from a minor oil discovery in the northern part of the Norwegian Sea. Preliminary estimates place the size of the discovery at less than 1 million standard cu m of recoverable oil. The discovery is not considered profitable.
Well 6611/1-1, the first exploration well in production license 896, was drilled by Seadrill’s West Hercules semisubmersible drilling rig 150 km northeast of Norne field and 150 km southwest of Bodø to a vertical depth of 1,874 m subsea. It was terminated in rocks from the Triassic Age. Water depth at the site is 357 m.
The objective of the well was to prove petroleum in reservoir rocks from the Early Jurassic Age (Tilje and Are formations).
The well encountered 7 m of oil-bearing sandstone in the upper part of the assumed Jurassic sequence. The sandstone, which has not yet been dated, has moderate to good reservoir quality.
The well encountered a total of 200 m of sandstones in what are thought to be the exploration targets in the Tilje and Are formations, with moderate to good reservoir quality. The sandstones are water-bearing.
Total lets contract for seismic survey offshore Angola
Total E&P Angola has let a contract to Ocean Infinity for 2D ultra high-resolution seismic surveys and seabed soil sampling in Block 32 and Block 17 in Angola.
Ocean Infinity recently expanded its fleet of autonomous underwater vehicles and has made advancements in battery technology, the company said in a press statement.
Total operates Block 32 with a 30% participating interest. Partners are Sonangol P&P, 30%; Sonangol Sinopec International 32 Ltd., 20%; Esso Exploration & Production Angola (Overseas) Ltd., 15%; and Galp Energia Overseas Block 32 BV, 5%. The block started production in July 2018 with Kaombo Norte. The second floating production storage and offloading unit of the project, Kaombo Sul, launched full-field production in April.
Total operates Block 17 (40%) where investment decisions were taken in 2018 to launch three new satellite projects: Zinia 2, Clov 2, and Dalia 3. Partners are Equinor, 23.33%; ExxonMobil Corp., 20%; and BP PLC, 16.67%. State-owned Sonangol is the concessionaire.
Kosmos continues evaluation of GoM inventory
Kosmos Energy, Dallas, completed drilling the Resolution exploration well (Kosmos 50%, BP 50%) in the US Gulf of Mexico. The well will be plugged and the well results integrated into the ongoing evaluation of the surrounding area.
Resolution—drilled in 600 m of water to 7,700 m TD—was designed to test an amplitude-supported sub-salt prospect in the underexplored western Garden Banks area. The well encountered reservoir quality sands; however, the primary exploration objective proved to be water bearing. A $55-million exploration expense is expected to be recorded in the fourth quarter related to the drilling.
Kosmos expects to spud the Oldfield prospect (Kosmos 40%, Hess 60%) in December with results in the first quarter of 2020. The company continues to high grade its multi-year infrastructure-led exploration prospect inventory in the Gulf of Mexico with a further three wells expected in 2020, it said.
Drilling & Production Quick Takes
Gazprom begins Zapadno-Tarkosalinskoye liquids production
Gazprom Neft subsidiary Gazpromneft-Zapolyarye has begun liquid hydrocarbon production at Zapadno-Tarkosalinskoye field in the Purovsky district of the Yamalo-Nenets Autonomous Okrug of northwestern Russia. Commercial oil inflow from the first horizontal well stands at 380 tonnes/day, with potential to increase to 600 tonnes/day.
Gazpromneft-Zapolyarye will drill a further eight production wells in the course of developing Zapadno-Tarkosalinskoye. A mobile oil treatment unit and compressor station will be commissioned in 2020, and two cluster pads and a gas pipeline constructed by that time.
Zapadno-Tarkosalinskoye reserves in place are 40.6 million tonnes of oil, 444.5 billion cu m of gas, and 7.1 million tonnes of condensate, according to Gazprom. Development of the multilayer field with a complex geological structure will take geological faults and abnormally high reservoir pressure into account.
Gazpromneft-Zapolyarye began work at this field in 2018. Initial development involved the previously drilled exploratory well being de-mothballed to eliminate geological uncertainties and clarify reserve quality and volumes.
Gazprom Neft First Deputy Chief Executive Officer Vadim Yakovlev said about half of the company’s production will occur in the Yamalo-Nenets Autonomous Okrug “as soon as 2020.” Earlier in 2019 Gazprom and Royal Dutch Shell formed a joint venture for development of oil and gas fields in the region (OGJ Online, June 6, 2019).
International rig count down in November
The international rig count for November reached 1,096 units, a decline of 34 units from October and an increase of 105 from November 2018, according to Baker Hughes data (OGJ Online, Nov. 7, 2019).
The international offshore rig count for November was 247, up 5 units from October and up 41 units from November 2018.
The worldwide rig count for November was 2,042, down 81 from October and down 224 from November 2018.
The average US rig count for November was 810, down 38 from October and down 267 from November 2018.
Europe was down 28 units with 147 in November and up 64 units year-over-year. Effective June 7, Ukraine has been added to the Baker Hughes International Rig Count.
Latin America is up 7 units from the previous month with 196 units and up 7 units year-over-year.
The Asia-Pacific region is down 6 with 220 units month-over-month and down 2 units from its year-ago average.
The Middle East is down a 7 units month-over-month to 417 and up 23 units year-over-year.
The average Canadian rig count for November was 136, down 9 from October and down 62 from November 2018.
Bayswater forms DJ basin development JV
Bayswater Resources and Bayswater Natural Resources Fund III, Denver, and the York Tactical Energy Fund, through YTEF Drilling Capital LLC, have formed a joint venture under which YTEF has committed to fund an undivided portion of up to 63 horizontal oil and gas wells on six well pads for the development of Bayswater’s Weld County, Colo. acreage in the volatile oil window of the DJ basin.
The investment will fund the drilling and completion of the joint wells targeting the oil-rich Niobrara A, B, C, and Codell stacked-pay intervals in accordance with a mutually agreed development plan. In exchange for funding up to $125 million for development, YTEF will receive an assignment of working interests. The joint wells are anticipated to be drilled and completed through the fourth quarter of 2020.
PROCESSING Quick Takes
Inter Pipeline devotes $935 million to polypropylene plant
The bulk of Inter Pipeline’s $1.2 billion capital expenditures in 2020, $935 million, will go to advancing construction of its Heartland Petrochemical Complex in Strathcona County, Alta., particularly the 525,000-tonne/year polypropylene plant and the final stages of its propane dehydrogenation unit. The company expects to finish construction in 2021.
Another $45 million will support on-going work on a new storage cavern at Inter Pipeline’s 40,000-b/d Redwater Olefinic Fractionator and debottlenecking of its 2,350-cu m/day Pioneer II offgas extraction site.
Inter Pipeline plans to invest roughly $75 million across its pipeline transportation systems in 2020. Within conventional oil pipelines, the company’s focus is on the multi-phased expansion of its Central Alberta pipeline system where it plans to invest $35 million to complete the program’s first two phases by spring 2020 which includes construction of two new 130,000-bbl storage tanks at its crude terminal near Stettler, Alta., and completion of the Viking Connector project.
Construction wraps on Delaware basin gas processing complex
Construction is now fully completed on all three cryogenic natural gas processing trains at Altus Midstream Co.’s Diamond Cryo Complex (DCC) in Alpine High, in southern Reeves County, Tex., in the Delaware basin (OGJ Online, Aug. 9, 2018).
Saulsbury Industries Inc., Odessa, Tex., recently completed construction on the remaining two of three 200-MMcfd gas processing plants, associated liquid stabilization, slug catches, and gas treating and residue gas compression units at the DCC, the service provider said on Dec. 4.
Completed on schedule and on budget, the entire project required 1.8 million work hours over the course of 14 months, without a recordable incident or injury, Saulsbury said.
Altus Midstream—a jointly owned partnership of Apache Corp. and Kayne Anderson Acquisition Corp.—commissioned the first of the DCC’s three gas processing trains in May (OGJ Online, June 5, 2019).
The second processing train reached start-up in July, Altus Midstream said in its second-quarter 2019 quarterly earnings report to investors.
Once commissioning of the third train is completed, DCC will have a combined cryogenic processing capacity of 600 MMcfd and be able to produce an estimated 60,000-75,000 b/d of NGLs for Apache.
Start-up of the third train is scheduled by yearend.
To date, the first two trains have demonstrated more than 99% ethane recovery operating in full recovery mode, with 100% recovery of propane, butanes and heavier liquids, the operator said.
All three cryogenic trains feature Honeywell UOP LLC’s supplemental rectification with reflux (SRX) processing technology to optimize processing economics with better NGL recoveries in both ethane recovery and rejection mode vs. more commonly used processing methods in the Permian basin.
The Viking Connector is a 75-km, 8-in. OD line that will connect Inter Pipeline’s Throne Station on the Bow River pipeline system to the Central Alberta pipeline system in the Stettler area. This project is expected to add 10,000-15,000 b/d to the Central Alberta system, linking various grades of light crude from the Viking and Mannville formations in east-central Alberta to the Edmonton market hub.
About $30 million will go to improving operating efficiencies of Inter Pipeline’s oil sands transportation. The remaining $10 million will develop several smaller growth projects across the pipeline systems.
Inter Pipeline plans to spend roughly $40 million in 2020 to meet increased demand for storage at certain European sites. Several smaller enhancements and efficiency projects will also be completed at storage located in the UK, Sweden, Germany, and the Netherlands.
Most of the investment associated with the bulk liquid storage assets is contingent upon retaining the business following completion of a previously announced sales process.
Zhejiang Satellite commissions new unit at Chinese complex
Zhejiang Satellite Petrochemical Co. Ltd. has commissioned a new pressure swing adsorption (PSA) unit from Honeywell UOP LLC to supply high-purity hydrogen to its integrated refining and petrochemicals complex in Pinghu City, Zhejiang Province, China.
Based on Honeywell UOP’s Polybed PSA technology—which uses proprietary UOP adsorbents to remove impurities at high pressure from hydrogen-containing process streams, allowing hydrogen to be recovered and upgraded to more than 99.9% purity to meet refining needs—the new PSA unit purifies hydrogen generated by an associated UOP C3 Oleflex propane dehydrogenation (PDH) unit also in use at the complex, the service provider said.
Alongside technology licensing, Honeywell UOP also provided services, equipment, catalysts, and adsorbents for the PSA unit.
Details regarding capacity of the unit, however, were not disclosed.
Zhejiang Satellite recently commissioned a second Honeywell UOP proprietary C3 Oleflex unit as part of the second phase of its PDH plant at the complex (OGJ Online, Sept. 13, 2019).
Intended to help meet China’s growing demand for propylene, the UOP C3 Oleflex plant produces 450,000 tonnes/year of polymer-grade propylene.
Under construction since 2016, Zhejiang Satellite’s Phase 2 PDH plant—alongside propylene—also was to be equipped to produce 300,000 tpy of polypropylene (OGJ Online, Sept. 29, 2017).
Phase 1 of the PDH plant began producing 450,000 tpy of propylene from propane in late 2014, also using C3 Oleflex process technology.
TRANSPORTATION Quick Takes
Commercial tender package released for Lake Charles LNG project
Energy Transfer LP and Shell US LNG have issued a comprehensive commercial tender package to engineering, procurement, and construction (EPC) contractors to submit final commercial bids for the Lake Charles LNG liquefaction project in Lake Charles, La. (OGJ Online, June 30, 2017).
If sanctioned by Energy Transfer and Shell, the project would modify Energy Transfer’s existing LNG import facility to add LNG liquefaction capacity of 16.45 million tonnes/year for export. Commercial bids are expected to be received in the second quarter of 2020.
The commercial tender expands on the May invitation to tender that focused on the technical scope of project, specifically the contractors’ verification of the engineering and design of the proposed liquefaction facility. The commercial tender invites the contractors to develop a comprehensive commercial bid for the lump sum turnkey contract based on a fully developed scope related to design, engineering, technical, and safety specifications for construction, commissioning, and start-up. The commercial tender also requires submission of a fully developed execution plan and completion schedule.
The companies signed a framework agreement designating Shell project lead before FID and as construction manager and operator of Lake Charles LNG if the project is sanctioned. Energy Transfer will be site manager and project coordinator prior to FID (OGJ Online, Mar. 26, 2019).
Freeport LNG Train 1 begins commercial operations
Freeport LNG Development LP (FLNG), Houston, started commercial operations from Train 1 on Dec. 8, the company reported (OGJ Online, Aug. 20, 2019). Freeport’s Train 1 is part of a multi-train liquefaction facility located on Quintana Island near Freeport, Tex.
Commissioning work for Freeport LNG’s Train 2 continues to progress with commercial operations expected to start in January. Construction on Train 3 is nearly complete, the company said, with commercial operations expected in May 2020.
In a precursor to first cargo, Train 2 has begun LNG production (OGJ Online, Dec. 6, 2019).
Freeport LNG’s three trains are expected to produce over 15 million tonnes/year. A fourth train in development would bring the plant’s total capacity to 20 million tpy. Final investment decision for Train 4 is targeted for the first quarter of 2020.
Gazprom signs MOU with Mongolia
Alexey Miller, Chairman of the Gazprom Management Committee, and Ulziisaikhan Enkhtuvshin, Deputy Prime Minister of Mongolia, signed a Memorandum of Understanding Dec. 5 that provides for a joint assessment of the feasibility of pipeline gas supplies from Russia to China across Mongolia.
The MOU comes after a working meeting between Miller and Ukhnaagiin Khurelsukh, Prime Minister of Mongolia, Dec. 3 in Moscow where the parties discussed the prospects of energy cooperation.
During the meeting it was noted that in November Gazprom Export carried out the first small-scale delivery of Russian liquefied natural gas to Mongolia.
On Nov. 4, Gazprom Export delivered the first batch of Russian LNG to Mongolia to be used as a vehicle fuel in municipal transport in the country’s capital city, Ulan-Bator. The batch weighed 36 tons. The first ever rail LNG shipment was loaded in special cryocontainers in Yakutsk on Oct. 22. It crossed the Russian-Mongolian border on Nov. 2.
